Adding to Stony Brook
James H. Simons is a world-class mathematician whose gift for numbers has made him billions of dollars. That fortune has provided the basis for a recently announced $60 million gift to Stony Brook University in Long Island, intended to create the Simons Center for Geometry and Physics. Simons and his wife, Marilyn, intend for the Center to provide enhanced training and support for graduate students, and have directed $40-45 million to fund an endowment that will pay for seven permanent professorships and about 30 visiting scholars per year. Simons’ is the largest gift ever donated to any one of the 64 institutions of the State University of New York (SUNY).
The Simonses have long been associated with Stony Brook. In the early ‘70s, Simons chaired the university’s mathematics faculty, and his wife earned a Ph.D. from the economics department. “It was my first administrative job,” Simons told the New York Times. “I helped build the university in a modest way. I met my wife there.”
Simons left academia in 1982 to found Renaissance Technologies, a hedge fund investment company. Last year, Forbes reported his net worth at $5.5 billion, making him the 57th wealthiest person in the world.
“The new Center will give many of the world’s best mathematicians and physicists the opportunity to work and interact in an environment and an architecture carefully designed to enhance progress,” says Simons. “We believe there is a chance that work accomplished at the Center will significantly change and deepen our understanding of the physical universe and of its basic mathematical structure.”
With the Simons gift, Stony Brook has raised over $260 million towards its $300 million capital campaign.
The couple will give about $80 million in grants this year through the Simons Foundation, which had $477 million in assets as of mid-2006. The foundation makes strategic contributions towards advancing “the frontiers of research in the basic sciences and mathematics.” It is also the principal funder of Math for America, a highly regarded nonprofit that works to recruit, train, and support highly qualified mathematics teachers for the nation’s high schools.
The 400 Club
Among the nation’s top 400 taxpayers, the average adjusted gross income in 2005 was $213.9 million, up from $172.8 million in 2004. According to Internal Revenue Service data gathered by the Wall Street Journal, the top 400 taxpayers reported a combined $85.6 billion worth of income for the year. To join the “400 Club” in 2005 required an income of at least $100.3 million, compared to a relatively modest $74.5 million a year earlier. If anything, these sums understate the case: adjusted gross income is computed after entering various qualified deductions and does not include tax-exempt interest income from state and local government bonds.
“Those numbers are really stunning,” says Michael Graetz, professor of law at Yale University and former Treasury Department official under President George H. W. Bush. “One hundred million dollars is an enormous estate to be accumulated over a lifetime, and not what we think of as one year’s income for anybody.”
Charitable donations from the 400 Club were likewise impressive, totaling a record $7.56 billion—an average of $19.2 million per return.
The Sorenson Legacy
On January 20, 2008, James LeVoy Sorenson passed away, leaving most of his $4.5 billion estate to the Sorenson Legacy Foundation of Salt Lake City, Utah. The family-run foundation is now expected to become one of the 20 wealthiest grantmaking organizations in the United States.
Sorenson made his fortune by creating dozens of groundbreaking medical devices-many of which are still in use. He helped develop the first computerized heart monitoring system, and devised (among other things) the first disposable paper surgical mask, the first modern venous catheters, and the first blood recycling system for surgical procedures.
Since its establishment in 2001, the Sorenson Legacy Foundation has directed $100 million towards arts groups, universities, religious organizations, medical research institutions, and charities for abused children.
Beneficiaries of Sorenson’s generosity have included colleges in Utah, molecular genealogy research facilities, Gallaudet University, and the Church of Jesus Christ of Latter-day Saints. His funds have also gone to the creation of a worldwide, correlated genetic and genealogical database to be used for ancestry research. Most recently, Sorenson pledged matching funds to the State of Utah to provide emergency dental care coverage for 40,000 blind, disabled, and elderly residents to offset lost government funding.
Foundation Giving, by the Numbers
The Foundation Center recently released its 2008 edition of Foundation Giving Trends. The study reviews the 2006 grants of $10,000 or more awarded by 1,263 of the largest private and community foundations in the United States. Grant dollars allocated by these organizations totaled $19.1 billion and represented roughly half of all giving by American foundations.
The group’s total giving rose by 16.4 percent in 2006, in large part due to the Bill and Melinda Gates Foundation’s sizeable contributions to global health and international development. Excluding the Gates Foundation, total giving increased 11.6 percent, compared to the previous year’s 6.1 percent gain.
Some 140,484 grants were awarded in 2006, representing a 7.3 percent increase over the previous year. Foundations made a record 386 grants over $5 million, with 156 grants over $10 million—the latter representing a 44 percent increase over 2005. While the Northeast has historically held the title of most generous region, in 2006 foundations based in the West contributed the largest share of grant dollars.
The highest rates of growth were seen in the categories of Health, International Affairs, and the Social Sciences. The largest allocations of grant dollars went to Health and to Education, with each category taking about 23 percent of total giving. Giving in the category of International Affairs/Development/Peace grew by a whopping 72.5 percent, while international giving overall increased 48.4 percent. Among the “population” recipients, the “economically disadvantaged” received most of the funding-a record $4 billion.
The Foundation Center will release its estimates of 2007 giving by the nation’s more than 71,000 private and community foundations in April 2008.
A More Charitably Inclined Tax Code
In his proposed budget for 2009, President Bush has included a number of provisions intended to encourage and facilitate charitable giving. His proposals would make permanent many of the temporary measures that expired at the end of 2007. The recently introduced provisions include:
- Allowing individuals over the age of 70½ to withdraw up to $100,000 from their IRAs, tax-free, for charitable contributions;
- Allowing businesses to claim a charitable deduction for donating computers, software, and computer accessories to schools and libraries;
- Allowing the food service industry to claim an “enhanced tax deduction” for donating excess food inventory to charity;
- Allowing a larger deduction for donors who contribute partial interests in real property for conservation purposes.
President Bush also introduced a proposal for a flat-rate, one percent excise tax on all net investment income earned by private foundations. Foundations currently pay a two percent tax-unless charitable giving for that year surpasses the past five years’ average, in which case the foundation qualifies for a one percent tax rate. The administration believes that an across-the-board one percent excise tax will simplify tax planning, free up additional funds for charitable giving, and ensure that “private foundations do not suffer adverse excise tax consequences if they increase their grant-making in a particular year to respond to charitable needs.”
A recent survey of 721 business executives has found that corporate philanthropy is getting increased public attention. The study, titled The State of Corporate Philanthropy, was sponsored by McKinsey & Company and authored by Sheila Bonini and Stephanie Chenevert.
“Companies that 20 years ago were held accountable only for direct, contractually specified, or regulated consequences of their actions,” write Bonini and Chenevert, “today find themselves held to account for the consequences of their actions in areas as disparate as offshoring, obesity, excessive consumer debt, environmental sustainability, and the governance of resource-rich, low-income nations.”
The executives surveyed acknowledge that their philanthropy is more likely to support a broad mix of local issues than to focus on narrower goals that may affect long-term shareholder value. As a result, their philanthropic programs are geared towards education, community organizations, and economic development, rather than, say, the environment, health care, and data security.
Three-quarters of survey respondents believe their company’s philanthropy to be “somewhat effective” in meeting social goals and stakeholder expectations. Among the one-fifth that sees its philanthropy as “very or extremely effective,” programs are more likely to address social and political trends relevant to the actual business of the company.
Nearly 90 percent of respondents set business goals for their philanthropic programs, including enhancing their corporate reputation, improving employee recruitment and retention, and differentiating the business from competitors. Almost one-third indicated that they had more specific business objectives, like “building knowledge about potential new markets” and “informing areas of innovation.” Of those with narrower business objectives, 57 percent reported being “somewhat successful” at achieving these goals, while 29 percent believe they have had little or no success.
The survey nevertheless finds that “alignment with business needs” ranks fourth among the factors that influence corporate philanthropic programs, outranked by the personal interests of the CEO and board members, the interests of employees, and the needs of the local community.